The price of Gas….

Gas meter

On the Isle of Wight 40% of the Island is not connected to mains gas. This includes our house.

This actually leaves people with three choices for heating; LPG, Oil or Electricity. Our house already had an underground LPG tank so we have continued to use LPG for our heating (and rather ancient cooker !!).

As everyone is aware the price of gas has risen considerably over the past year. This is due in part to the war in Ukraine but to be fair the price had started to rise before that… The common belief is that LPG is more expensive than mains gas but for us, currently, that is not the case. As with everything you have to do a bit of leg work and get to grips with the various different methods that are used to sell gas. If you are connected to the gas main you will pay a price per kWh and a daily standing charge. These are covered by the OFGEM price cap and the governments price guarantee. Neither of these apply to LPG.

If you use LPG you need to sign a 2yr contract with a supplier. On the Isle of Wight there are two suppliers, Calor and Flogas. The prices they charge are NOT covered by Ofgem regulations. We have now been in our house for two years and just needed to renew our contract. Rather than paying per kWh we pay per litre of gas…..

Just to clear up any confusion… LPG really is delivered as a liquid under pressure. There is a regulator valve on the tank connecting it to your homes pipework and it comes in to your house as a gas so, at this point, it can be measured in cubic meters. The energy it produces when you burn it is measured in kWh. Confused ? I don’t blame you. It has taken me a while to get my head round this and the maths right so I can compare prices ! To make it easy there are 7.08 kWh per litre of LPG (to make it really easy I’m going to round it to 7kWh). So, to compare unit prices with mains gas we need to divide the litre price by 7…..

For the first two years our LPG price was fixed at 33p per litre. This works out at 4.7 p per kWh. So, when we moved in it was more expensive than mains gas at approx 3p per kWh. There is also a daily standing charge but this is very roughly equal to mains gas.

When we came to renew we had a few options. Move on to the “variable” rate of 75p per litre with a £75 surcharge per delivery. Initially Flogas quoted me a fixed rate for one year of 63p per litre and then variable after that but with no surcharge… I contacted LPG Save who had negotiated our original deal… they were able to quote 51p per litre fixed for 2 years (still with Flogas !).

Flogas then phoned me and offered me 50p per litre, fixed for one year with a maximum price increase to 55p the following year. I put all the numbers in to a spreadsheet using our last 12 months usage and found this was the better offer even if the 2nd year was the full 55p per litre.

As a comparison this works out at approx 7p/kWh this year and 8p/kWh next year….. When you compare this to mains gas at approx 10p/kWh all of a sudden LPG is cheaper….

Will it stay this way ? To be honest I doubt it. There is a fair change that the price of mains gas will fall over the next year and once again will be cheaper than LPG. But, at the moment, if you can negotiate, then LPG can be a slightly cheaper option. IF mains gas prices return to the 3-4p/kWh then for me LPG will be twice the price and I won’t be able to do anything about it until Dec 2024.

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